Consultants provide tools to cut benefit costs
Gallagher, Lighthouse executives say current push is for comparison shopping, consumer engagement, data analytics.
In an era when many employers lack the administrative resources to select and manage employee benefits, local consultants are thriving.
Ryan Quillan, regional vice president for benefits division at Lighthouse Group in Grand Rapids, said the division saw revenue of $9,958,000 in 2016, up from $9,719,000 in 2015.
He attributes the increase in part to the fact many employers don’t have the ability to deal with the complexity of regulations in the health benefits space or the time to assess which options are most cost-effective and competitive.
“Lighthouse has a benchmarking survey, which captures trends every year regarding what employers are changing within medical plans,” Quillan said.
“We’re able to educate employers on plan design trends, how many employers have a high-deductible health plan, what’s the average deductible, how much employers are contributing toward premiums … what the average co-pays and co-insurance are for the employee and how much they might pay for doctor visits and brand-name drugs.
“Every one of our consultants shares that data with their respective and prospective clients to help them design a plan that aligns with their corporate objectives. It’s to keep their costs under control and ensure they’re competitive with the industry.”
Bryan Hirn, area president of Gallagher Benefits Services Inc., a division of Arthur J. Gallagher & Co., said the company’s benefits revenue went up from $3,500,000 in 2015 to $3,912,539 in 2016.
Hirn said one reason for the growth is Gallagher operates a West Michigan health insurance pool, consisting of several public entity groups, including school districts.
“The reason for the revenue growth in the pool is that our (benefits) rating is very competitive,” he said.
One thing Lighthouse and Gallagher stress to their clients and the clients’ employees is comparison shopping is necessary to get the best benefits and health care services at the lowest rates.
“There are online tools to do comparison shopping,” Hirn said. “But we recommend to our larger clients to offer a concierge service that provides a second opinion, so people can determine what the cost is elsewhere.
“For example, one of my consultants in Detroit was told he would need to have a shoulder replacement. He was 42. The shoulder replacement would last 15 years and then need to be done again. There was a service called 2nd.MD he used that said if you go to rehabilitation therapy, you can get the same result without surgery.”
Quillan said in many cases, health plan administrators, like Priority Health or Blue Cross Blue Shield, offer the cost comparison tools on their websites, saving money for the employee and employer.
“The member can go and search the cost of care for a procedure,” he said. “A doctor may say you need an MRI, and the doctor might say you should go to XYZ facility to get this MRI. A lot of times, a patient will follow that recommendation without researching costs.
“With the increase in high-deductible health plans, the employees are on the hook for whatever the cost of a procedure is. An MRI could range from $350 to $2,000. So, we have to provide the solution to get that MRI at a quality facility at a reasonable cost.
“In turn, we accomplish two things: We can minimize the out-of-pocket cost an employee or family might experience, and overall, we’re able to control and contain the cost of the employer’s plan.”
Hirn said Gallagher strives to help its clients maximize employee engagement in the benefits process by offering information on whichever communication platforms the workers use.
“We have a multi-generational workforce,” he said. “You have baby boomers who want a paper pamphlet copy of their explanation of benefits, people in their 30s say, ‘Give me a web link, and I’ll look at it online,’ and millennials say, ‘Give me a smartphone app.’
“If we’re going to be effective in communication to our employees, we need to be effective in communication with all the generations and meet them where they’re at.”
Quillan said employee engagement should include an emphasis on critical thinking.
“It’s really important for (employees) to engage. There’s a term out there called consumerism. Don’t just follow what you’re being told. Ask a lot of questions of your physicians, of your agent. Help them become better consumers.”
Hirn said data analytics is a big part of the solution for curbing costs.
“Where our analytics come into play is when we start identifying why the cost is going up,” Hirn said. “One area we’ve had a lot of success with is prescription drugs. Our analysts look at the plan and try to find ways to change the contractual benefits. The benefits don’t change; what changes are the terms of the contract.
“(We had) a large client with 3,000 employees, and we were able to reduce their prescription cost by $481 per employee per year.”
Quillan said Lighthouse strives to continually monitor and report its successes to employers.
“It’s really important (consultants) measure their progress with these employers and provide them with actuarial financial reporting to ensure the steps (we’re) taking are achieving the goals of containing costs and reducing out-of-pocket costs for employees.
“The partnership between the consultant and the employer is to routinely monitor the financial performance of their benefit plan.”